Alliances - The Ugly Duckling of Sales
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Alliances - The Ugly Duckling of Sales

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Why are alliance sales so misunderstood? After all they represent a dramatically lower cost of sale than other alternatives? Is it because they involve joint value creation? make up your own mind ...

Why are alliance sales so misunderstood? After all they represent a dramatically lower cost of sale than other alternatives? Is it because they involve joint value creation? make up your own mind by reading this simple presentation.

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  • Core GAP teamNina ChristiansenKaren GatehouseLenka PyszkovaMichael WittwerKarla KabrtovaAnders Ericsson (SW)Robert KaupAnnette IbsenAnders Essner (SW)David RobertsKari BostadExtended teamAnni Reimers – marketingJarkko Kosonen - FI

Alliances - The Ugly Duckling of Sales Alliances - The Ugly Duckling of Sales Presentation Transcript

  • The Sales Ugly Duckling – Alliances! How Alliance Best Practices Can Deliver Competitive Advantage
  • Contents The following topics are covered in this briefing: 1 Why should organisations partner? 2 Why is a best practice approach the best option? 3 What do we mean by „Alliance Best Practice‟? 4 Why isn‟t everyone following a best practice approach? 5 6 What evidence is there that best practices = best results? 7 Appendices – Further supporting evidence and documentation Page  2 What would be involved in developing an alliance excellence model?
  • The prime purpose of alliances - sales „What is the main purpose of alliances in your company? - We survey IT executives at VP level and above regularly. - The last survey was conducted in 2012. Percentage Responses New Technologies - The question we posed was: - What is the prime purpose of alliances in your organisation? - The top five answers are shown opposite. New Skills New Markets New Products New Sales 0 20 40 60 80
  • Why should we partner? Alliance sales are the cheapest type of sales available: Getting Others to Sell Your ‘Stuff’  Organisations need to grow to survive. Typically they have done so by using the „build, buy, ally‟ model of business development.  The recession has made the first two of these growth options difficult hence attention is now turning to the third option – ally.  Organisations are now actively looking for the best way to ally with a range of: suppliers, competitors, customers and others.  Research from a multiple series of sources suggests that the best way to ally is by using a best practice approach.  This short paper describes: the rationale, the supporting justification, and the most cost efficient method of implementing such alliance best practice programmes. Page  4
  • Why is a best practice approach the best option? Best practice = higher return at lower cost in less time Approved Theory  Following a „best practice‟ approach has been recognised as a successful business strategy for many years. (See for example the Total Quality movement e.g. Baldridge and the European Foundation for Quality Management). Advantages  Such programmes have unmistakable advantages over alternative proprietary solutions. Typically these are: greater speed, lower cost, better quality, predictability of outcomes and less risk. Proven Success Strategies  By relying on proven success strategies that have been developed previously organisations will enjoy all the advantages above in developing their alliance sales programmes. Better Results Page  5  Results from best practice alliance sales programmes show a higher return in less time at a lower cost (see later research justifications).
  • What do we mean by ‘Alliance Best Practice’? Best Practice = Doing the right things in the right order:  There is a great deal of confusion regarding the term „best practice‟ or „best practices‟ particularly when used to describe strategic alliances. Page  6  In this briefing paper we describe „best practice‟ as systematised common sense. An approach, behaviour, proc ess or activity that shows predictably better results in a quicker and more efficient manner than the alternatives.  ABP has researched over 27,000 alliance relationships and currently maintains a database of over 180,000 entries. It is from observations of this database that we draw our best practice conclusions.
  • Why isn’t everyone using it? Common sense is not always common practice  Knowing that you should do something and having the courage to do it is not the same thing. (See for example Strategy and the Fat Smoker by David H Maister).  Many organisations labour under the misapprehension that designing and developing proprietary approaches is the only way to secure a competitive advantage.  In fact simply knowing that best practices exist is no guarantee to success. The skill is in knowing which best practices can be implemented at which time by the organisation: 1) Unconscious Incopetence, 2) Conscious Incompetence 3) Conscious Competence 4) Unconscious Competence Page  7
  • QUESTION ONE WHAT ARE THE ADVANTAGES OF AN ALLIANCE SALE OVER A DIRECT SALE? Page  8
  • Research by Steve Steinhilber of Cisco Systems Circa 2006 New Business 5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 Direct Sales Page  9 Alliance Sales
  • An alliance sales example (IBM) Following a best practice approach has delivered year on year increases in all revenue types: Partner Resell and Influence Client TCV Sell To 180 All figures in € millions 160 Commercial value has increased steadily year on year 140 120 100 80 60 40 20 0 2009 Page  10 2010 2011 2012
  • Alliance Sales Journey in Figures 2009 2010 2011 2012 IBM investment €200K €460K €1.6M €2.1M Client Investment €250K €385K €649K €300K Client Headcount 4 8 13 6 TCV = Total Contract Value €100 M Page  11 €344 M €460 M 500 M? TCV
  • What evidence is there that best practice = best results? All of the following reports concluded that best practices = best results Practioners  Cisco benchmarking research 1999 – 2007  Procter and Gamble internal R&D programme 2002 – 2006  AstraZeneca – Internal project 2005 – 2010  Eli Lilly alliance programme re-evaluation 2001 – 2002  GSK Healthcare – strategic review 2004 2008 This list is a small partial sample for example purposes only. For a fuller list of sources please see the Appendices Section. Page  12 Consultants  Anderson Consulting „Best Practices in Strategic Alliances‟ 1989  Boston Consulting Group Pharma Benchmarking report 2010. Academics  University of the United Nations – Bi Annual State of Alliances Review 2002 2004 2006 2008 2010.  IBM Healthcare industry annual review 2001 2011.  Harvard University (Rosabeth Moss Kanter) Review of 37 global alliance programmes 2002 – 2006  Booz Allen and Hamilton review of 3,500 global partnering organisations 2002 – 2006.  University of Southern California annual review of 12,000 alliances in Silicon Valley.  McKinsey annual alliance review 1995 – 2005.  University of Eindhoven Innovation centre annual review.
  • QUESTION TWO WHAT WOULD AN ALLIANCE SALES PROCESS LOOK LIKE? Page  13
  • Category Vision Skills Trust Purpose To create a Vision and a strategy for the relationship. To develop the skills and knowledge needed by both / all partners for success. To grow the relationship effectively over time. Objectives  To agree the type of partnership to be pursued.  To agree the scope of the partnership.  To identify relevant key stakeholders from both / all partners.  To agree current relationship value (baseline).  To develop appropriate Business Value Propositions (BVPs).  To document the vision and strategy for the partnership. • To agree and document a joint go to market (GTM) plan. • To improve both / all teams collaboration skills. • To develop a simple and robust governance model. • To develop an internal and external communication programme. • To achieve a high degree of internal and B2B alignment. • To train all partners appropriately on the chosen products and services of the BVPs. • To increase the degree of organisational trust between all parties. • To deliver BVPs to time and quality. • To increase the number and type of BVPs sold. • To secure investment funding and executive support for the partnership from both / all partners. • To identify and eradicate cultural barriers to progress (both personal and organisational). • To monitor and manage progress to key performance indicators (KPIs). Critical Success Factors (CSFs)     Common Vision Joint Business Plan Alliance Process MOUP     Collaboration Skills Communication Internal alignment B2B Operational alignment     Outputs  MOUP document  Initial relationship value statement/s.  Go / No go decision for the relationship.  Partnering readiness assessment (Optional).      Joint go to market (GTM) plan. Governance model. Communication programme. Training plan. Skills gap analysis report.  Relationship development plan.  Alliance balanced scorecard.  Relationship change management plan.  Annual relationship strategy reviews (recurring).  BVP innovation process. Trust (B2B) Cultural alignment Senior Executive Support Operational Metrics
  • Category Vision Skills Trust  Conduct alliance readiness assessment (Optional)    Conduct TECP workshop to agree the type of partnership to be pursued Run go to market (GTM) workshop Assess both teams collaboration skills Develop skills improvement plans Develop scalable governance model Develop internal and external communication programme Develop internal and B2B alignment action plans Train all partners appropriately on the chosen products and services of the BVPs How to run „Alliance to Win‟ workshops ABP alliance skills assessment tool Various example governance models Internal and external communication plan templates Internal and B2B alignment discussion papers and training modules Example echnical skills training programmes  Tasks     Tools to Support Tasks         Conduct an MOUP workshop to agree: vision, strategy scope and key stakeholders Agree current relationship value (baseline) Develop / agree Business Value Propositions (BVPs) Sign off MOUP  ABP alliance capability assessment tool Partner selection criteria white paper How to run an MOUP white paper How to calculate relationship value white paper How to run BVP workshops presentation Various example MOUP sign off documents                     Develop an alliance balanced scorecard and monitor results quarterly. Develop a joint relationship development plan Track BVP progress and amend as necessary Develop new BVP development process Agree joint funding / resourcing budget for the relationship Address cultural barriers through partnering attributes model Monitor progress and report KPIs How to develop alliance balanced scorecards (white paper and slide deck) Joint relationship development plan templates (various) BVP tracking system Resourcing and funding plan templates Partnering attributes model and assessment tools Identity compass (slide deck)
  • How do you build an alliance sales programme? Executing a best practice alliance sales programme is a five step process: Step 1 - Baseline • Deliverables include best practice education/guidance, programme charter, programme design, and a customized alliance framework • Provides goal alignment, implementable vision, and a more robust alliance valuation methodology. Step 1 Step 2 Step 3 – Implementation • Deliverables include additional alliance launches, performance metrics, an improved processes for inter-business decision-making, and a recommendation for a relationship management system • Makes alliances an integral part of the organisation‟s enterprise thinking. Step 3 Step 2 – Strategy and Design • Deliverables include finalized vision, portfolio plan, detailed roadmap, partner matrix, and tactical improvement opportunities • Provides a pragmatic realization path with clear benefits defined Page  16 Step 4 Step 5 – Review • Tracking the programme effectiveness to pre established success criteria. • Taking remedial action as necessary Step 5 Step 4 – Scale Capability • Deliverables include skills matrix, tools, legal frameworks, internal certification programme and, web site • Spreads alliance capabilities throughout company; disseminates best practices; embeds training for certification and alliance thinking in business systems
  • Alliance Excellence Model Establishing partnering as an organisational competence requires a framework Alliance Capability Alliance Performance People Procedures Leadership Commercial Technical Programme Alliance Processes Strategic Products Cultural Platform Key Performance Business Results Operational Internal Benchmarking on an Ongoing Basis : Continuous Improvement Cycle Alliance Maturity Model (AMMTM) Alliance Best Practice Index (ABPITM) External Benchmarking Alliance Best Practice Database (ABPDTM) KEY MESSAGES:     Investment in training alone will not deliver alliance competence (AC) Trained personnel need ongoing support when they return to their jobs Building capability is essential to delivering key business results Alliance Competence = Competitive business advantage Page  17
  • FINAL QUESTION WHAT IS YOUR CURRENT COST OF: A) A DIRECT SALE? B) AN ALLIANCE SALE? Page  18
  • Typical partner segmentation pyramid Typical IT Language 1 1 = Alliances (GSIs) Tier 1 = Partnership 2 = Technology Partners 2 3 = Value Added Resellers (VARS) 3 4 = Distributors / Resellers 4 Page  19 Alliance Best Practice Language Tier 2 = Collaborative Tier 3 = Enhanced Tier 4 = Transactional
  • Alliance cost of sales model Percentage Cost of Sales 16.00% 14.00% 12.00% 10.00% Marketing Sales Execution 8.00% 6.00% 4.00% 2.00% al Tr an sa c ti on ce d an En h ol la bo r C P ar t ne r sh ip at iv e 0.00% Partner Segment Page  20
  • Further Details For further details please contact; Mike Nevin Managing Partner Alliance Best Practice Ltd Web: www.alliancebestpractice.com Office: +44 (0)1675 442490 Mobile: +44 (0)7766 752350 E Mail: mike.nevin@alliancebestpractice.com
  • APPENDICES Page  22
  • Support for the Alliance Best Practice Approach There is considerable evidence supporting a best practice approach: Research Community Practitioners  There are currently 523 documents in the ABP Framework which support the concept of best practices in alliances.  There are currently 1,777 active members of the Alliance Best Practice community.  The Alliance Best Practice approach has been taught to over 1,000 active alliance executives during the last 10 years.  The oldest entry comes from 1989 the newest is from June 2011.  The community is split into both a general group and a thought leaders group.  The research comprises: books, white papers, articles, research assignments, presentatio ns and investigations.  There are 53 global Chief Alliance Officers and renowned alliance authors in the thought leadership group. Page  23  Companies who have adopted the approach (amonst others) include:  IBM, Microsoft, AstraZeneca, BASF, Bristol Myers Squibb, Pfizer, SAP, Rolls Royce, Starbucks, Oracle, and Bayer Schering Pharma.
  • What is Alliance Best Practice (ABP)? ABP is a research consultancy specialising in B2B strategic alliances Alliance Best Practice  Alliance best practices are the identified practices that research has shown lead to optimal alliance results  ABP is a group of over 20 internatioanal alliance experts able to cover the world and work in multiple languages  ABP is dedicated to: discovering, developing and disseminating best practices for its clients  It does this through the ABP Database (ABPDBTM) Page  24
  • Alliance Best Practices Exist ABP has investigated over 27,000 alliances to identify best practices Research  Recognised in General Management theory goes hand in hand with quality and benchmarking.  ABP has examined 27,000 international collaborative relationships from both domestic and international sources.  We found factors which appeared consistently in successful strategic alliances – common success factors (CSFs). Page  25 Validation Implications  Common Success Factors (CSFs) - „Those practices, principles, procedures, behaviours or factors which appear in successful strategic alliances in a statistically relevant manner‟.  ABP has since used the resulting framework with over 600 in depth benchmarking examinations of strategic alliances in action.  ABP then validated the concepts with over 500 practicing alliance managers from ASAP – The Association of Strategic Alliance Professionals.  The ABP database currently holds over 180,000 observations of these CSFs in practice.  The results show that doing the right things (best practices) produced the right results (more value / revenue).
  • Partner ‘Intimacy’ Spectrum Both partners need to define the topology of the progression and the ‘value of the journey’ Low Intimacy High Intimacy Low Value High Value 0 = None 25 = Low 50 = Median  Commodity Price  Some customization  Interchangeable Product  Flexibility/levels of service  Highly specified deliverables  Special knowledge  Buy from and sell to  Buy from, sell to and sell with (GTM together) 75 = High 100 = Perfection  Customized/ individualized  Shared risks & investment  Process & data integration  Deeply integrated  Solutions oriented  Shared rewards  Greater cost value leverage  Mutually interdependent  Breakthrough market value
  • Common Success Factors : Best Practices There are currently 52 CSFs in 5 categories Commercial Co1 Business Value Proposition (BVP) Technical Strategic T11 Valuation of assets S20 Shared objectives Co2 Due Diligence T12 Partner company market position S21 Relationship Scope Co3 Optimum Legal / Business Structure T13 Host company market position S22 Tactical and strategic risk Co4 Alliance Audit T14 Market fit of proposed solution S23 Risk sharing Co5 Key metrics Co6 Alliance reward system Co7 Commercial cost Co8 Commercial benefit Co9 Process for negotiation Co10 Expected Cost value ratio T15 Product fit with partners offerings T16 Identified mutual needs in the relationship T17 Process for team problem solving T18 Shared Control T19 Partner accountability S24 Exit strategies S25 Senior executive support S26 B2B Strategic alignment S27 Fit with strategic business path S28 Other relationships with same partner Cultural Operational Cu31 Business to business trust O39 Alliance process Cu32 Collaborative corporate mindset Cu33 Collaboration skills O40 Speed of progress O41 Revenue flow O42 Business plan O43 Communication Cu34 Dedicated alliance manager O44 Health check Cu35 Alliance centre of excellence O46 Change mgt. Cu36 Decision making process Cu37 Other cultural issues Cu38 B2B Cultural Alignment O45 Alliance charter O47 Operational metrics O48 Operational alignment O49 Exponential breakthroughs O50 Internal alignment S30 Common vision Page  27 S29 Common strategic ground rules O52 Issue escalation O51 Project plan
  • Alliance Capability Model (ACMTM) The goal is to establish partnering as an organisational competence Alliance Capability Alliance Performance People Governance Leadership Commercial Technical Resources Processes Strategic Structure Cultural Technology Key Performance Results Operational Internal Benchmarking on an Ongoing Basis : Continuous Improvement Cycle Alliance Maturity Model (AMMTM) Alliance Best Practice Index External Benchmarking Alliance Best Practice Database (ABPDTM) KEY MESSAGES:     Investment in training alone will not deliver alliance competence (AC) Alliance managers need ongoing support to produce best results Building capability is essential to delivering results AC = Competitive business advantage
  • Partnering Competence The ability to apply the CSFs in an efficient and effective manner Alliance Knowledge People / Skills / Behaviours  The combination of CSFs into suitable individual proceses  Four stages of knowledge growth:  The combination of processes into partnering practices  Built around alliance portfolio management:  Add  Adjust  Optimise  Retire Page  29 Organisational Structure  Built around:  Strategic  Unconcious incompetence  Managerial  Conscious incompetence  In a matrix with:  Operational  Conscious competence  Alliance  Unconscious competence  Marketing  Sales  Technology  Local Involvement
  • Alliance Maturity There are three observable stages in organisational alliance maturity Stage 1 - Opportunistic  Alliances are opportunistic  Each alliance is a „stand alone‟ venture  Alliances are not part of the company‟s “Standard Operating Procedure”  Typically alliances are used to secure tactical „deals‟ or exploit individual market opportunities Page  30 Stage 2 - Systematic  Separate corporate efforts in different areas of business Stage 3 - Endemic  Planned investment in partnering capability  Strategic partners developed  Wide scale use of full range of alliance: training, tools and priocesses  Effort begun to adopt “best practices” in alliance management  Close integration of: sales, marketing, technology, innovation etc  „Islands‟ of ownership of alliances formed
  • The Alliance Maturity Model AMMTM Company 2 80 70 60 Company 1 50 40 Stage I Stage II Stage III 30 20 • Alliances are opportunistic • Each alliance is a „stand alone‟ venture • Alliances are not part of the company‟s “Standard Operating Procedure” • Separate corporate efforts in different areas of business • Strategic partners developed • Effort begun to adopt “best practices” in alliance management • Planned investment in partnering capability • Wide scale use of full range of alliance capability building • Close integration of sales, marketing, innovation etc 10 C 3 C 31 C 11 W C C 1 C 30 C 17 C 8 B IC C 16 C 18 C 2 C 22 C 4 C 27 C 26 C 12 C 33 C 15 C 13 C 19 C 20 C 25 C 14 C 24 C 23 C 32 C 28 C 9 C 29 C 5 C 34 C 7 C 10 C 6 C 21 0
  • Alliance Best Practice Framework The ABPDBTM with 180,000+ entries lies at the heart of the Framework „Tools‟ refer to any documents that help users apply the Framework knowledge. Bench Marks MOUP There are 52 Critical Success Factors (CSFs) identified from examining over 27,000 international strategic alliances. ABPDTM The Alliance Maturity Model TM establishes: current situation, (benchmark) current and future challenges, the nature of the journey‟ and success strategies for cost effective progress. Page  32 Diagnostics Relationship Optimisation By combining the principles established in the CSFs a range of Best Practices (BPs) have been developed
  • Relationships Benchmarked ABP has worked with over 300 of the worlds best partnering organisations Organisations in the ABPDBTM 15 25 25 72 27 48 Pre Formation Growth Extension Page  33 Formation Maturity Decline / Renewal Accenture (Asia Pac), Accenture (EMEA), Accenture (USA), Aenis, Air France, AirPlus, Alcatel (UK), Alcatel Lucent, Amec, AMP Capital, ANA Airlines, Apple Computer, Ariba, Arriva, Associated Business Leaders LLC, AstraZeneca, AT+T, Atos Origin, Avaya, Avis, AXA, Bank of America, BASF, Basilica Consulting, Battelle, Bax Global, Bayer Schering Pharma, BBC Corporation, BCX, BDO Unicon, Bearing Point, Bell Canada, BMI Airlines, BNP Paribas, Boeringer Ingelheim, Borland, BP Oil and Gas, Bristol-Myers Squibb, the British Library, BT, BT Global Services, BT Wholesale, Buckland Austin, Business Objects, Capgemini, Cardinal Health, Carlson Wagonlit, Caterpillar, CGI, Chordiant, CiberNovesoft, Cisco, Cognos, Computacenter, Continental Airlines, CSC, Csiper, Delaware, Dell, Deloitte, Delta Airlines, Deutsche Bank, Disney Corporation, Dupont Industries, EBRC, Eli Lilly, EMC, Epiphany, Ericsson, Everis, Exact Software, Excel Logistics, Experian, Exponent, Fontline, Fontworkx, Fujitsu Communications, Fujitsu Consulting, Fujitsu Services, Fujitsu Siemens, GE Capital Finance, Genesys, Genset, GlaxoSmithKline, GSK (Healthcare), GSK (Pharma), Hitachi Consulting, HP (UK), HP (USA), i2 Technologies, IBM (Asia Pac), IBM (India), IBM (UK), IBM (USA), IBM Global Services (NE IOT), IBM Global Services (USA), IBS, IDS Sheer, Imbercal, Imperial Tobacco, Infor, Intel, Intentia, ITS, Japan Corporate Bank, Kalamazoo, Kana, Keane, KLM Airlines, KLM Cargo, KPMG, Kuehne & Nagle, Lawson, Lenovo, Logica, LTSB, Lufthansa, Marks and Spencer, McAfee, Merck, Micro Focus, Microsoft (CS), Microsoft (EPG), Mitie, Motorola, MSG, NEC Computers, nFocus, Nokia, Nordea, Nortel, Northwest Airlines, Norwich Union Life, O2 Telefonica, Omax Auto, Omega Signs, Oracle, Peregrine, Pfizer, PLM, RBS, RCC, Reckitt Benckiser, Rider Levitt Bucknall, Rifcon, Roiter Zucker, Rolls Royce, SAP (EMEA), SAP (Global), SAP (UK), SAS Institute, Satyam, Scottish Widows, Serco, Siebel, Siemens AG, Siemens Business Services, Siemens Enterprise Networks, Siemens Comms, Siemens GmbH, Singapore Airlines, Skyteam, Sprint, SSA, Staffware, Star Alliance, Starbucks, StorageTek, T Mobile, Tata Communications, Tata Consulting Services (TCS), TDG Logistics, Telmex (mexico), Telus (Canada), TNT Express, Tubelines, UBS, uLogistics, Unipart Logistics, Unisys, United Airlines, Verizon, Vodafone, Wipro, Withy King, Xerox, Xerox Services, Zurich Financial Services
  • Benchmarks by sector High Tech and Pharma companies comprise the majority of entries: ABPDTM By Sector 15 17 28 21  The largest sector is High Tech  All business sectors are now beginning to use alliances  Most common use is: 19 112  Developing New Business (Growth)  Developing New Products and Services (Innovation) Airlines / Finance Pharma Services / Media Page  34 IT Manufacturing Other  Developing Quality or Cost Control (Recession)
  • External research improves knowledge To improve organisations must be aware of what „best practice‟ looks like: Unconscious Incompetence  Organisations don‟t know what they don‟t know!  No understanding of Best Practices or current performance  Value loss high Conscious Incompetence  Developing understanding that Best Practices exist, but no systems to take advantage of them. Difficulties in generating the business case.  Can use the Framework to massively reduce cost of alliances Conscious Competence  Knowledge of Best Practices but need training and experience to apply them successfully.cost effectively generate breakthrough levels of incremental revenue. Unconscious Competence  Collaboration is a core competence now organisations can use partnering as a key business strategy.  Target = Partner of Choice (POC) in chosen sectors. Page  35
  • Better knowledge = competitive advantage The impact of lack of „best practice‟ knowledge: Unconscious Incompetence  Organisations don‟t know what they don‟t know!  No understanding of BP or current performance  Value loss high Conscious Incompetence  Developing understanding that BP exist, but no systems to take advantage of them. Difficulties in generating The business case.  Can use the Framework to massively reduce cost of alliances Conscious Competence  Knowledge of BP but need training and experience to apply them successfully.cost effectively generate breakthrough levels of incremental revenue. Unconscious Competence  Collaboration is a core competence now organisations can use partnering as a key business strategy.  Target = Partner of Choice (POC) in chosen sectors. Page  36
  • Commercial Implications of Best Practice II Best Practice (BP) consistently out performs Non Best Practice (NBP) Best Practice (BP) Non Best Practice (NBP) 65 70 60 50 Same Company Same VP Different Approach 61 49 48 39 40 34 29 30 23 Widening Delta as times get tough 25 21 19 20 59 19 2009 2010 15 10 0 2004 Page  37 2005 2006 2007 2008
  • Setting alliance manager standards A professional well educated alliance executive is the „point of the sword‟  Alliance manager standards are now beginning to be introduced  Organisations are paying more attention to alliance management training Page  38  ABP chaired the certification standards committee for ASAP (the Association of Strategic Alliance Professionals) and researched and built the competency framework on which the certification is based.  In addition ABP has worked with IBM, Starbucks, Eli Lilly, and Rolls Royce to set suitable alliance manager standards to support training needs analysis and appraisal review systems.
  • Individual relationship benchmark example Co1  Generally consistent scoring O49 O48 O47 O46  Client scored lower (usually) than the Partner O50 100 O51 O52 - Co1 Defined business value proposition - T2 - Partner company market position - T3 - Host company market position - S7 – B2B Strategic Alignment - Cu8 – B2b Cultural Alignment - O2 – Speed of progress so far - O12 – Internal Alignment Co4 90 Co5 Co6 Co7 Co8 80 70 60 O45  Differences were perceived in the following areas; Co2 Co3 Co9 50 O44 Co10 40 O43 T11 30 O42 T12 20 O41 10 T13 O40 0 T14 O39 T15 Cu38 T16 Cu37 T17 Cu36 T18 Cu35 Cu34 Cu33 Cu32 Cu31 T19 S20 S21 S22 S30 S29 S28 S26 S25 S27 S24 S23
  • ABP Relationship Optimisation Process Having a consistent way to optimise relationships improves results: Identifier Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Description Goal Setting and Scoping Diagnostic Action Planning Resource Mapping 90 Day Review Objective To identify the currently projected commercial value of the relationship for the next 12 months. To generate an objective view of the relationship which shows 52 strengths and weaknesses identified as a score from 0-100 Objective – To generate a jointly agreed (with the partner) action plan to optimise the relationship. To map all identified actions to a RACI[1] framework to identify key stakeholders roles and responsibilities. To track the progress of the joint action plan to target/s and take remedial action as required. Activities • Contact all key stakeholders and draw up strawman value projection • Resolve conflicts and discrepancies with stakeholders • Document draft final value projection • Obtain sign off of value projection from senior executive sponsor • Agree on key stakeholders to provide data • Gather data and send results to ABP • ABP benchmarks the data and produces draft alliance efficiency report (AER) • Discuss AER with partner (and / or ABP) and decide whether to progress to stage 3 • Construct agreed agenda from draft report • Analyse areas of misalignment (i.e. CSFs which show different scores from one partner to the other) • Agree common scores for all 52 areas (with the partner) • Identify areas for action • Identify short term and long term actions • Identify help required with long term actions • Produce agreed action plan • Conduct RACI chart mapping for all identified improvement actions • Communicate and agree role of all stakeholders on the RACI chart • Revise the RACI chart as necessary • Agree a single stakeholder from both /all organisations in each category • Sign off RACI chart with host and partner executives • Conduct healthcheck assessment prior to review meeting • Construct agenda and pre meeting progress report • Conduct meeting focusing on underperforming areas • Agree revised action plan with remedial actions • Publish revised action plan Inputs • Relationship business plans • Alliance strategy document • Briefing Pack from ABP • Online diagnostic • Briefing Pack from ABP • ABP coaching as required • Draft AER • Suggested workshop agenda • Agreed workshop attendee list • Agreed Action Plan • RACI resource mapping tool • Jointly greed action plan • Jointly agreed stakeholder map • MOUP • Agenda Outputs • Agreed Scope • Agreed initial commercial valuation • Draft alliance efficiency report (AER) from ABP • Benchmarking report • Decision to proceed • Jointly agreed action plan • Stakeholder map of agreed actions • Revised Action Plan
  • The ROI of the Ally Model The „Ally‟ model outperforms the „Build‟ or „Buy‟ models:  The commercial return of the „ally‟ model is typically five times higher than the other two models*.  Organisations are increasingly turning to the third generation business growth model of „ally‟ because it represents a more flexible and cost effective growth model. In addition it is easier to achieve in a recession.  *Source Booz Allen and Hamilton Research 1996 2002
  • The two forces driving systematisation Systematisation is being driven by internal and external; factors Internal External Page  42      Sarbanes Oxley, Basel II & III, Enron, credit crunch, etc.  External audits of processes  CFOs identifying value in the balance sheet  It costs less to be working to a system  CEOs tired of the hype „show me the money‟ Regular interaction drives value Need to reuse knowledge gained Individual / corporate responsibility Systematisation allows consistent comparison
  • Commercial return of systematisation Best practice practitioners on average earn more from their alliances:  Efficiency - (e.g. internal knowledge transfer, having a defined process, having a clear business value proposition, constructing good alignment with partners, etc.).  Effectiveness - (e.g. Assessing potential partners more quickly, refusing to be drawn into the opportunistic deal chasing merry go round but rather setting and keeping to a defined strategy, etc.) - *Source Alliance Best Practice database 2001 2011
  • Alliance myths Some commonly held views are negated by the evidence in the database: Alliance Best Practice  Alliances are about people pure and simple  There can be no „one‟ single best practice all alliances are unique  Collaboration is an unnatural act  Alliances are not „sexy‟ business models  If the money is good enough then people will pretend to get along  No organisation is going to willingly commit to a limited number of partners  There are too many variables in any collaborative relationship to allow meaningful analysis Page  44
  • Alliance Challenges Significant alliance challenges remain Internal Challenges  Building bricks with no straw External Challenges  Confusing terminology  Embedding collaborative thinking in an organisation  Identifying Key Stakeholders  Collaborative negotiation  Lack of control  Developing a business case for an alliance department / function  Appointing the wrong person to the alliance role  Technical excellence is not partnering excellence  Short term thinking  Managing multiple alliances Page  45  Distributed governance  Identifying alliance value  Positioning alliances in organisational structures  Overcoming organisational resistance / inertia
  • The developing future for alliances Collaborative business to business relationships are here to stay Internal Challenges External Challenges  More revenue coming from indirect means  Development of PRM systems  More audit pressures on organisations to have auditable alliance processes  Training emerging as a capability enhancing tool of choice  Greater focus on systematisation  Alliance manager certification and qualification  More structure in alliance job descriptions, behaviours and assessment centres  Greater and more balanced measurement of alliances  Alliance virtual teams and „ad hoc‟ knowledge exchange taking place  Greater focus on the ROI of alliances  New models and business cases being built (e.g. cost of sales v cost of alliances)  Accelerating Hi Tech alliances with Pharma companies Page  46
  • Further Details For further details please contact; Mike Nevin Managing Partner Alliance Best Practice Ltd Web: www.alliancebestpractice.com Office: +44 (0)1675 442490 Mobile: +44 (0)7766 752350 E Mail: mike.nevin@alliancebestpractice.com